Korean defense industry expanding presence in global market

• Published Dec 11, 2021 9:00 AM KST
• Updated Dec 12, 2021 9:59 AM KST

By Jung Da-min

The Korean defense industry is expanding its presence in the global market, with some successful promotions of domestic weapons to other countries' militaries in recent months.

Among such successful cases are: the United Arab Emirates' (UAE) decision in mid-November to purchase Korean-made mid-range surface-to-air missiles (M-SAM) and Slovakia's planned purchase of Korean-made trainer jets, following the signing of an agreement between local aircraft maker Korea Aerospace Industries (KAI) and Slovakia's state-run defense firm, Letecke opravovne Trencin (LOTN), in early November.

In the case of the UAE, the country's defense ministry announced via Twitter its intention to acquire the Korean air defense system named Cheongung-II, adding that the value of the deal may reach about $3.5 billion ($4 trillion won). If struck, the deal will be the single most lucrative weapons export in the history of the nation's defense industry, four times larger than the current 1-trillion-won export record of submarines to Indonesia.

With LIG Nex1 being the main contractor that has been mass-producing the M-SAM since 2018, other local companies, such as Hanwha Systems, Hanwha Defense and Kia, also participated in the project, which was launched by the state-run Agency for Defense Development (ADD) in 2012. The missile passed a suitability evaluation for field operations in 2017.

In the case of Slovakia, the country has been pushing for a $500-million defense project to replace its aging fleet of L-39 trainer aircraft, and so decided to import KAI's FA-50 fighters for the project. LOTN and KAI signed an agreement to ensure smooth bilateral cooperation in the introduction of FA-50 aircraft to Slovakia, on Nov. 3. If the aircraft are introduced, it will be the first export of Korean-made aircraft to a member state of the European Union (EU) and North Atlantic Treaty Organization (NATO).

Korea seeks more export opportunities in global defense market

For Korea, where the economy largely depends on trade and export, the global defense market offers many important opportunities.

This situation is especially so as the country's defense budget for improving its weapons systems has been cut by 606.7 billion won for next year ― from 17.33 trillion won in 2021 to 16.69 trillion won in 2022. It is the first time in 15 years that the budget has been reduced.

With Korean firms seeking to find new opportunities abroad, the African and Middle East markets, as well as the South American market, are emerging as potential prospective markets. In particular, defense officials are eyeing Egypt, as the Egyptian Armed Forces is currently modernizing its military forces and diversifying its supplier nations. According to the Stockholm International Peace Research Institute (SIPRI), Egypt is the world's third-largest arms importer, after Saudi Arabia and India, as of the period of 2015 to 2019.

Seeking new opportunities in the African and Middle East region, a total of 14 Korean companies participated in the Egypt Defence Expo (EDEX) 2021 that ran from Nov. 29 to Dec. 3. Among the 14 companies were four big ones, including: Hanwha Defense, Hyundai Rotem, Poongsan and Hancom Lifecare, as well as other small-and medium-sized companies.

Hanwha Defense's promotion of its K9 self-propelled howitzer (SPH) drew attention there especially, with Egyptian President Abdel Fattah Al-Sisi visiting the Hanwha booth on the inauguration day of the EDEX to listen to the progress of Egypt's contemplation of purchasing the K9. The Egyptian Armed Forces are considering acquiring a package of K9s and support vehicles, raising hopes for Hanwha and other smaller companies participating in the project to make their debut in the African market and pave the way for other local companies to gain standing in the African and Middle Eastern markets.

For Hyundai Rotem, it promoted its K2 Black Panther, a next-generation, Korean-made battle tank designed by the ADD and manufactured by the company.

Seo Jun-mo, leader of global defense sales and the marketing team for the company, said Hyundai Rotem has a favorable brand image among Egyptians, as it has sold its electric locomotives for use in Cairo Metro's Lines 1 and 3, and it will further promote its K2 tanks as a long-term sales goal on such bases.

“The Egyptian market is considered to be a market with a lot of potential in the Middle Eastern and African region. For Hyundai Rotem, we have already successfully exported our electric trains, acquiring a good brand image,” Seo said.

“As the Egyptian Armed Forces are also showing interest in acquiring new tanks, along with the recent successful completion of the test operations of K2 tanks in the Middle East region, we expect that there will be good results in the tank business as well, with a long-term vision.”

While companies selling ground weapon systems are seeking new opportunities in the Middle Eastern and African markets, aircraft seller KAI is eyeing the South American market.

KAI participated in the Expodefensa 2021, one of the main security and defense fairs in Latin America, held in Bogota, Colombia, from Nov. 29 to Dec. 1, to promote its FA-50 fighters in the Central and South American markets. As Colombia is carrying out a $1-billion project to replace 24 units of the A-37, an aging light attack aircraft, KAI proposed the export-type FA-50, with air-to-air and air-to-ground armaments and extended flying range, for the project.

Colombian President Ivan Duque Marquez visited the KAI exhibition booth and said, “During my recent visit to Korea, I discussed defense cooperation with President Moon Jae-in.” The Colombian president visited Korea in late August and held a summit with Moon. “As we are well aware of the excellence of the FA-50, we hope that it will contribute to the modernization of the Colombian Air Force with a good proposal,” he said.

The Central and South American market is a key sales area for Korea, as about 60 units of light attack aircraft worth $3 billion are expected to be introduced in countries there, including Colombia, Peru, Mexico and Uruguay.

KAI entered the South American market by exporting 20 KT-1P basic training aircraft to Peru in 2011, and is strengthening its marketing in the Latin American market based on the stable operation of and good feedback on the KT-1P aircraft, within the Peruvian Air Force.

Also participating in the Dubai Airshow 2021 that ran from Nov. 14 to 18, KAI promoted its FA-50 and T-50 trainer jets ― which can be upgraded to FA-50 by adding armaments ― to the Uruguayan Air Force. KAI also participated in Peru's SITDEF 2021 held in Lima from Oct. 28 to 31 to promote its FA-50.